ROP Life Insurance / Return of Premium Life Insurance
What is ROP Life Insurance?
Also known as return of premium life insurance, ROP life insurance is like other types of life insurance. It is an agreement between you and the life insurance company (carrier).
You agree to pay premiums. The carrier agrees to pay your beneficiaries a sum of money if you die.
Like all life insurance, ROP term life insurance is an excellent way to protect your loved ones.
How is ROP Life Insurance Different?
There is one main difference between return of premium life insurance and other types of life policies.
With ROP term life, at the end of the guaranteed term period, the carrier will refund or return all of the premiums you have paid.
This means that at the end of the term period, your net cost will equal zero.
Why Should I Get ROP Term Life Insurance?
Return of premium life insurance makes it possible to have coverage with a net cost of zero. (At the end of the term you will have had coverage AND gotten all your money back).
ROP life insurance is also a safe place to put your money to receive what amounts to a modest return on your investment.
Why Shouldn't I Get ROP Term Life Insurance?
The main reason people don't get ROP term life insurance is that it costs more. It can cost up to three times as much as term life insurance.
Some financial advisors also suggest that if you can afford ROP life insurance, then you should consider getting regular term life insurance and investing the difference.
By investing the difference, you could end up having more money at the end of the term period than you would get as a refund from the ROP life insurance.
For this reason, most people only get return of premium term life insurance policies for 20 or 30 years. (The comparative return on your investment will be higher the longer you have the policy).
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